Why investors should follow the money to read the market’s mood

Fund flows reveal market sentiment, giving a clear picture of whether investors are feeling confident and taking risks or playing it safe.

Fund flows reveal market sentiment. Pic: Getty Images

• Fund flows reveal market sentiment

• HUB24 and GQG crush it, and AEF holds strong

• Perpetual and Regal struggle but keep pushing 

If you want to know what the market’s really thinking, watch the money.

Fund inflows and outflows are one of the clearest signals of market sentiment. It’s where investors are quietly showing you their hand.

When money’s flowing into equity funds or riskier sectors, it’s a sign of confidence. There’s a bit of risk appetite, belief in growth, maybe even a little FOMO creeping in.

But when you start seeing outflows, big ones, that’s caution. Investors are taking risk off the table.

Maybe they’re moving into defensive sectors, maybe cash, maybe gold. Whichever way, it means sentiment is cooling.

So, tracking these flows, especially in these interesting times, gives you more than just a pulse check.

It tells you which parts of the market are in favour, where there’s doubt, and how investors are positioning for what’s next.

It’s not the whole story, sure. But it’s one of the best ways to cut through the noise and get a read on what people with money are actually doing, not just saying.

What the announcements have told us

Over the last week or so, a few fundies on the ASX have opened up their books. So what did they reveal, and should investors be concerned?

Well... the results have actually been mixed, but given the market conditions, things are actually holding up pretty well.

While some managers are flourishing, others are grappling with challenges in a volatile market.

The key takeaway here is perhaps that while volatility has shaken things up, some firms are not only weathering the storm but emerging stronger.

Meanwhile, others are focusing on cost-saving measures to get back on track.

The standouts

Hub24 (ASX:HUB)

HUB24 just dropped a monster Q3 update, and it’s looking like it's in beast mode for FY25.

The platform pulled in a record $4.9 billion in net inflows for the quarter, that’s a 39% jump on this time last year.

That boost pushed its total Funds Under Administration (FUM) to a whopping $124.1 billion, up 24% year-on-year. Big money.

Even without a chunky $1.3 billion migration deal that helped boost the numbers, it still brought in $3.6 billion in fresh, organic inflows so the core engine’s clearly humming.

The platform’s also getting more love from advisers, signing 28 new distribution deals in the quarter and lifting its adviser count to 5,015,  up 14% from last year.

The company's not done either. HUB24 says it’s on track to wrap up around $5 billion worth of migrations from Equity Trustees across FY24 and FY25, locking in more scale and momentum.

With big demographic tailwinds and superannuation laws fuelling the fire, it looks like this train’s got a lot more track ahead.

GQG Partners (ASX:GQG)

GQG Partners just dropped one of its best quarters yet, raking in a juicy US$4.6 billion in net inflows for the March quarter, including a solid US$1.8 billion in March alone.

That run pushed its total FUM to a record-breaking US$161.9 billion. Not bad for a company that’s built its name on staying calm while the market freaks out.

And true to form, three out of four of its flagship strategies beat their benchmarks.

While the markets wobbled on the back of global tariff news, GQG kept its cool and leaned into quality plays with reliable earnings, the fundie said.

By quarter’s end, its portfolios were sitting on the lowest beta since GQG launched back in 2016, which basically means it's steering a smoother ride than the broader market.

Steady hands. Big flows. Strong signals. GQG believes it's got the wind at its back.

Australian Ethical Investment (ASX:AEF)

In a rocky quarter for markets, AEF managed to stay pretty steady, with FUM only dipping slightly to $13.1 billion.

Its superannuation business held firm thanks to regular guarantee contributions keeping things ticking along, even while markets were wobbling.

And despite the chaos, AEF still pulled in $110 million in net flows across retail and wholesale, not bad at all.

Institutional saw a bit of money walk out the door, mainly due to one client needing to free up capital, but it didn’t really rattle the ship.

The bigger pressure came from markets. The ASX300 dropped 4%, while AEF’s more spread-out portfolio only slipped 1.6%. A $220 million drop isn’t nothing, but it could’ve been way worse.

“Regardless of the context, we remain firmly focused on investing in line with our Ethical Charter as we have done for over 38 years...” AEF CEO John McMurdo said.

The laggards

Perpetual (ASX:PPT)

Perpetual’s Asset Management arm hit a bit of a speed bump in Q3, with AUM (asset under management) slipping 4% to around $221 billion.

The drop came off the back of $8.9 billion in net outflows, and a bit of currency drag knocking off another $0.9 billion. Not ideal, but not unexpected in choppy markets.

Still, it’s not all doom and gloom. About 62% of its investment strategies have outperformed their benchmarks over the past three years, so the engine room’s still got some punch.

Looking ahead, the focus is all about tightening things up.

Perpetual’s pushing hard on efficiency and cost-cutting, with $30 million in annual savings already on track by June, and a bigger $70-80 million target in sight by 2027.

Regal Partners (ASX:RPL)

Regal had a bit of a bumpy ride in the March quarter, with FUM dropping to $16.5 billion, that’s an 8.3% slide since December.

But if you zoom out a bit and include non-fee earning commitments, total FUM creeps back up to $17.9 billion, so the bigger picture looks a bit steadier.

Regal also still managed to pull in $149 million in net inflows across a bunch of its strategies, everything from global long/short plays to small caps, resource royalties, and its unlisted Private Fund. Not bad, especially in a shaky market.

Markets were rough, and a hefty $540 million hit came largely from a writedown in biotech stock Opthea, which hurt its books.

In short, not its best quarter, but Regal's still in the game and pulling in capital.

Originally published as Why investors should follow the money to read the market’s mood